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Why HHS Created Partnership Exchanges and Why More States Are Choosing Them

New Hampshire: We’re in.

North Carolina: We’re not.

The two states on Tuesday were the latest to announce their intentions on the Affordable Care Act’s health insurance exchanges. States have until Feb. 15 to tell HHS whether they’ll retain even some control over the exchanges, or let the Obama administration run the exchanges for them.

And while New Hampshire made clear that it wants to partner with the federal government to launch an insurance exchange, North Carolina backed out of a previous plan to do exactly that.

By Friday, we’ll know where half a dozen other states stand, too.

Background on Partnership Model
The Affordable Care Act didn’t originally spell out the partnership model; under the law, states faced a binary choice of running their own insurance exchanges or punting the responsibility to the government.

But HHS officials realized they needed to tweak the ACA’s approach, as more than 30 states — increasingly led by Republicans, who took over 11 statehouses in the 2010 election — announced they planned to opt out of the exchanges altogether. This would leave HHS officials with “an awesome task in establishing and operating exchanges in [so many] different states and coordinating those operations with state Medicaid programs and insurance departments,” before open enrollment begins in October 2013, Paul Starr writes in The American Prospect.

As a result, the agency in 2011 introduced the partnership model in hopes of shifting some of the responsibility for running exchanges back to the states.

Under the hybrid approach, the federal government takes on setting up the exchange’s website and other back-end responsibilities, while states keep functions such as approving health plans and setting up consumer assistance programs. HHS also hopes that the partnership model will be a path for states that weren’t ready to run their own exchanges to take them over eventually.

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Deja Association: The Republican Health Reform Idea Hiding in Obamacare

If the Administration wants to make good on President Obama’s election night promise to work across the aisle to solve the nation’s problems, a good place to start would be how it implements a key provision of Obamacare – namely, the Republican idea buried in Section 1334.

The Affordable Care Act is a bulging sketchbook of ideas – some old, some new, some borrowed, some not-so-blue – for improving Americans’ access to health insurance. Obamacare’s cheerleaders and naysayers alike will probably be shocked to learn that one of those ideas, both old and borrowed, was formulated more than a dozen years ago by advocates of market-based health reform. Once the cornerstone of President George W. Bush’s and presidential candidate John McCain’s health policy platforms, the “Association Health Plan” – or AHP – lives on today in Obamacare.

This time around, AHPs are called “Multi-State Plans.” As before, they seek to let consumers, the self-employed, and small businesses from across the country band together into groups to buy a health plan from insurers competing across the country. These old-new plans were and are a powerful idea that could shake up local insurance markets, catalyze competition, and significantly reduce costs – if implemented by the Obama Administration as designed by their Republican architects. The original AHPs – also known for a time as “health marts” – were to be vehicles for giving individuals and the smallest groups access to a full range of insurance options, with the same purchasing freedom and bargaining power of large groups and self-insured employers. They also represent the most feasible way to consummate a perennially popular bipartisan idea for health insurance market reform: model private purchasing by consumers and small groups after the highly successful federal employees health benefits program.

With critical mass, these old-new plans would consolidate the large, chaotic mess at the long end of the insurance market – the tens of millions of individuals, self-employed folks, family businesses, and small groups suffering from the highest costs, lowest medical coverage ratios, and least affordable premiums. Why? Because this end of the market isn’t much of market at all, but hundreds of local markets with limited choices and 50 different sets of rules and regulatory processes.

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What the Rick Scott Decision Says About the Future of Health Care in the U.S.

In 2009, Rick Scott founded Conservatives for Patients’ Rights, a health care pressure group opposed to President Obama’s health reforms.

In 2010, Scott ran for governor of Florida on a mission to repeal Obamacare.

In 2012, Scott … will work to implement Obamacare.

For some conservatives, it’s a shocking reversal. Leaders of Americans for Prosperity, the conservative organization backed by the influential Koch brothers, were publicly disappointed in the Florida governor — who not so long ago said the Affordable Care Act was “the biggest job killer in the history of the country.”

Now, it will be Scott’s job to help implement it.

Changing Tune

Given his prominence, Scott’s move from Obamacare opponent to grudging supporter may be the biggest symbolic shift on the law since its passage.

The Florida governor was reportedly pressured by state legislators to negotiate with federal officials over the ACA, once November’s election made clear that Obamacare was here to stay.

But Scott won’t be the last GOP official to change his tune. More health care groups in other Republican-led states are putting similar pressure on their leaders to opt into the ACA’s Medicaid expansion, in hopes of securing additional dollars for providers.

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The Nefarious Big Bird- Health Care Connection

The flap greeting Mitt Romney’s cheerful admission that as president he’d defund Big Bird’s nesting place on public television could turn out to be good news for a federal agency promoting safe medical care that faces a similar extinction threat. But we won’t know till after the election whether the little-known agency benefited from Big Bird’s protective presence.

The stage was set for Romney’s Big Bird boast by a bill Republicans pushed through a House Appropriations subcommittee in July that slashed or eliminated budgets for a host of programs, including public television’s parent, the Corporation for Public Broadcasting. A committee statement at the time said the move was meant “to encourage CPB to operate exclusively on private funds.” That same bill completely abolished the Agency for Health Care Research and Quality (AHRQ).

Health policy wonks lamented that terminating the agency “would badly undermine important research on health care quality, disparities in care and patient safety,” as a member of AHRQ’s national advisory council put it. But hardly anyone else noticed.

The end of AHRQ didn’t even rate a separate mention in the committee’s lengthy press release. And while Politico reported that a Democratic subcommittee member called it “the only federal agency whose sole mission is to improve the quality, safety and cost efficiency of health care,” the subcommittee’s GOP chairman said, in effect, the death sentence was nothing personal. It was just a budget-balancing action and “not a reflection on anything.”

That’s where Big Bird waddles into the picture.

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A Healthcare Contract With America

Critics of the Affordable Care Act (Obamacare) need an alternative vision. What follows is a short explanation of the core ideas posted at the Congressional Health Care Caucus and developed in greater detail in the book Priceless: Curing the Healthcare Crisis.

Tax FairnessFamilies at the same income level should get the same help from government when they obtain private health insurance, regardless of where they obtain it. The federal government encourages the purchase of private health insurance through the tax system. Yet the current approach is arbitrary, regressive and unfair. Instead of paying taxable wages, employers are able to purchase health insurance for their employees with untaxed dollars. These employer-paid premiums avoid federal income taxes, federal payroll taxes (FICA), and state and local income taxes as well. This “subsidy” is worth almost half the cost of the insurance for a middle income family. Yet the same family receives virtually no tax relief if it purchases the insurance on its own.

Because of the way we subsidize private health insurance, the higher the family’s tax bracket, the greater the subsidy. A family earning $100,000 gets six times as much tax relief as a family earning $25,000. We are giving the most encouragement to those who need it least.

As an alternative, we should replace the current system of tax and spending subsidies with a system that offers everyone a uniform, fixed-dollar tax credit for the purchase of health insurance. The credit would be refundable, so that it would be available even to those with no tax liability. A reasonable goal, for example, would be a credit of $2,500 per adult and $8,000 for a family of four.

Universality: Unclaimed tax relief should be made available to local safety net institutions to be used in case the uninsured cannot pay their own medical bills. If an individual chooses to be uninsured, the unclaimed tax credit should be sent to a safety net agency in the community where the person lives. These funds would provide a source of finance in case the uninsured are unable to pay their medical bills.

Under this approach, the government pledges a fixed sum of money for every individual and money follows people. If everyone in Dallas County opts to obtain private insurance, there would be no need to fund a safety net and all the government’s support would be in the form of tax credits for health insurance premiums. On the other hand, if everyone in Dallas County opts to be uninsured, all the unclaimed tax credits would go to safety net institutions in Dallas.

This is an easy reform to implement, even if peoples’ insurance status changes often over the course of a year. All the federal government needs to know is how many people live in each community. If the tax credits claimed on income tax returns fall short of their potential for the community as a whole, the balance would be provided in the form of a block grant to be spent at the local level.

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How Obama Botched and Bungled the Health Reform Message

While it’s comforting to just blame the GOP for the unhappiness with health reform threatening the president’s re-election, the truth is that Barack Obama repeatedly botched, bungled and bobbled the health reform message. There were three big mistakes:

The Passionless Play

While Candidate Obama proclaimed a passionate moral commitment to fix American health care, President Obama delved into legislative details.

When a Baptist minister at a nationally televised town hall asked in mid-2009 whether reform would cause his benefits to be taxed due to “government taking over health care,” Candidate Obama might have replied that 22,000 of the minister’s neighbors die each year because they lack any benefits at all. Instead, President Obama’s three-part reply recapped his plans for tax code fairness.

While Republicans railed about mythical “death panels,” and angry Tea Party demonstrators held signs showing Obama with a Hitler moustache, the president opted to leave emotion to his opponents. The former grassroots organizer who inspired a million people of all ages and ethnicities to flock to Washington for his inauguration never once tried to mobilize ordinary Americans to demand a basic right available in all other industrialized nations. In fact, he hasn’t even mobilized the nearly 50 million uninsured, who have no more favorable opinion about the new law than those with health insurance!

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Is There a Republican Alternative to ObamaCare?

GOP to the Uninsured: (Feel Free to) Drop Dead.” So reads the title Michael Millenson post at the Health Care Blog yesterday. It gets worse:

[N]o Republican presidential candidate has ever presented a serious plan to cover all the uninsured … The difference between Democrats and this generation of Republicans — unfortunately including even the GOP Doctors Caucus — is not at its core a disagreement on what government can legitimately do to help create universal access to health care for the 50 million Americans without it, but whether the goal itself is worth pursuing.

Was Millenson completely asleep (like Rip Van Winkle) during the last election? Does he not read my Wall Street Journal editorials? Does he never visit my blog? Or was this meant to be an April fool’s column?

John McCain’s health plan was more radical and even more progressive than Obama Care. I’ve never seen any serious health policy wonk deny that.  Maybe Millenson doesn’t live in a battle ground state. If he did, he would know that the Obama campaign spent more money attacking the McCain health plan during the election than has ever been spent for or against a public policy idea in the history of the republic. In fact, it is probably no exaggeration to say that Obama successfully turned the election into a referendum on the McCain health plan!

The McCain health plan is discussed at this blog here, here, here, here and here.

And although Millenson singles out Oklahoma Senator Tom Coburn as an especially egregious example of the Republican failure on health policy, the McCain vision actually was based on a bill, sponsored by Sen. Coburn and Sen. Richard Burr (R-NC), along with Reps. Paul Ryan (R-WI) and Devin Nunes (R-CA), [hereinafter called the Coburn bill]. That bill, in turn, was based on an idea which Mark Pauly and I proposed in a Health Affairs article more than a decade ago. (Does Millenson not read Health Affairs?)

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GOP to Uninsured: (Feel Free to) Drop Dead

“We are now contemplating, Heaven save the mark, a bill that would tax the well for the benefit of the ill.”

That’s not a quote from oral arguments at the Supreme Court over the constitutionality of the Affordable Care Act or from one of the earnest conservatives demonstrating against it outside. It’s actually the beginning of an editorial in the Aug. 15, 1949 issue of The New York State Journal of Medicine denouncing the pernicious effects of health insurance. To be clear: not government-mandated health insurance, but all third-party health insurance.

I wrote about that editorial in a July 16, 2009 blog entitled, “GOP to Uninsured: Drop Dead.” My blog was prompted by a Wall Street Journal op-ed the previous day from Dr. Thomas Szasz, an emeritus professor of psychiatry, who counseled readers not to confuse ethics and economics:

The idea that every life is infinitely precious and therefore everyone deserves the same kind of optimal medical care is a fine religious sentiment and moral ideal. As political and economic policy, it is vainglorious delusion….We must stop talking about “health care” as if it were some kind of collective public service, like fire protection, provided equally to everyone who needs it….If we persevere in our quixotic quest for a fetishized medical equality we will sacrifice personal freedom as its price.

This was a month before Oklahoma GOP Sen. Tom Coburn, a physician, told a sobbing, middle-aged woman that “government is not the answer” after she confessed she couldn’t afford care for her brain-injured husband. The crowd of Coburn constituents gathered to discuss health care reform applauded. And it was before Texas Rep. Ron Paul, also a physician, responded evasively when asked by moderator Wolf Blitzer at a September, 2011 GOP presidential debate what should be done about an uninsured 30-year-old working man in a coma.

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The Rebirth of Social Darwinism

What kind of society, exactly, do modern Republicans want? I’ve been listening to Republican candidates in an effort to discern an overall philosophy, a broadly-shared vision, an ideal picture of America.

They say they want a smaller government but that can’t be it. Most seek a larger national defense and more muscular homeland security. Almost all want to widen the government’s powers of search and surveillance inside the United States – eradicating possible terrorists, expunging undocumented immigrants, “securing” the nation’s borders. They want stiffer criminal sentences, including broader application of the death penalty. Many also want government to intrude on the most intimate aspects of private life.

They call themselves conservatives but that’s not it, either. They don’t want to conserve what we now have. They’d rather take the country backwards – before the 1960s and 1970s, and the Environmental Protection Act, Medicare, and Medicaid; before the New Deal, and its provision for Social Security, unemployment insurance, the forty-hour workweek, laws against child labor, and official recognition of trade unions; even before the Progressive Era, and the first national income tax, antitrust laws, and Federal Reserve.

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Paul Ryan Still Doesn’t Get It

Republican House Budget chief Paul Ryan still doesn’t get it. He blames Tuesday’s upset victory of Democrat Kathy Hochul over Republican Jane Corwin to represent New York’s 26th congressional district on Democratic scare tactics.

Hochul had focused like a laser on the Republican plan to turn Medicare into vouchers that would funnel the money to private health insurers. Republicans didn’t exactly take it lying down. The National Republican Congressional Committee poured over $400,000 into the race, and Karl Rove’s American Crossroads provided Corwin an additional $700,000 of support. But the money didn’t work. Even in this traditionally Republican district – represented in the past by such GOP notables as Jack Kemp and William Miller, both of whom would become vice presidential candidates – Hochul’s message hit home.

Ryan calls it “demagoguery,” accusing Hochul and her fellow Democrats of trying to “scare seniors into thinking that their current benefits are being affected.”

Scare tactics? Seniors have every right to be scared. His plan would eviscerate Medicare by privatizing it with vouchers that would fall further and further behind the rising cost of health insurance. And Ryan and the Republicans offer no means of slowing rising health-care costs. To the contrary, they want to repeal every cost-containment measure enacted in last year’s health-reform legislation. The inevitable result: More and more seniors would be priced out of the market for health care.Continue reading…

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